ITC Ltd: India's Diversified Giant Ousts BAT as Global Tobacco Leader

According to a report from The Telegraph, a daily newspaper in Kolkata, India, on December 7th, Indian conglomerate ITC Ltd has become the world's third-largest tobacco company, surpassing British American Tobacco (BAT), following a significant sell-off of BAT stocks that led to a sharp decline in their share prices.

ITC, a company that diversified its business from tobacco to fast-moving consumer goods, hotels, paper, and agricultural products, reached a market value of $68.6 billion by the end of the trading day on December 7th. On the other hand, British American Tobacco closed at a market value of £51.58 billion (approximately $64.9 billion).

The ITC company was established in 1910 as the India Tobacco Company Limited. As the company's ownership gradually became more Indian, the name was changed to I.T.C. in 1970, and later renamed ITC Limited in 1974.

British American Tobacco (BAT), established in 1902, is a joint venture between American Tobacco Company and Imperial Tobacco Company of Great Britain. It continues to hold significant stake in India's ITC Limited. Through three entities, British and American Tobacco Companies collectively own 29.04% of ITC, which is valued at a staggering $19.9 billion.

British American Tobacco's stake in ITC accounts for nearly one-third of the company's market value. However, the classification of British American Tobacco's stake in ITC as foreign direct investment is problematic because India prohibits foreign direct investment in tobacco companies, which restricts British American Tobacco's options in the country.

British American Tobacco, a multinational tobacco company, is publicly listed on the International Tobacco Company (ITC) and has two directors representing the company's shareholders.

The stock of ITC has been consistently on the rise, surpassing the broader market by a significant margin. In the past year alone, it has shown an impressive growth of 34.7%, and over the course of three years, it has risen by 125.5%. Investors continue to place their bets on the company's diversified strategy, the increasing profitability of its fast-moving consumer goods business, the growth in cigarette sales, and the recovery of its hotel industry.

In the six months ending on September 30, 2023, the tobacco business accounted for only 37% of ITC Company's total revenue. However, it accounted for 78% of the company's pre-tax profit.

In contrast, the stocks of British American Tobacco hit multi-year lows on Wednesday as the company wrote off $31.5 billion of value from some of its American cigarette brands. British American Tobacco saw a decline of as much as 10% on the London Stock Exchange, reaching its lowest level since September 2010.

It is worth mentioning that British American Tobacco has set a target for half of its revenue to come from non-combustible products by 2035.